Question 1

Huge Cart Inc. gives you the following information pertaining to the year 2014.   The rate of return on assets Huge Cart Inc. is:

Accepted Answer

A)  55.5%. 
B)  30.0%. 
C)  18.7%. 
D)  16.6%. 
A)  55.5%. 
B)  30.0%. 
C)  18.7%. 
D)  16.6%.

Question 2

Working capital is

Accepted Answer

A)  capital which has been reinvested in the business. 
B)  unappropriated retained earnings. 
C)  cash and receivables less current liabilities. 
D)  none of these answer choices are correct. 
A)  capital which has been reinvested in the business. 
B)  unappropriated retained earnings. 
C)  cash and receivables less current liabilities. 
D)  none of these answer choices are correct.

Question 3

Under IFRS, current assets are listed in:

Accepted Answer

A)  the order of liquidity. 
B)  the reverse order of liquidity. 
C)  the ascending order of their balances. 
D)  the descending order of their balances. 
A)  the order of liquidity. 
B)  the reverse order of liquidity. 
C)  the ascending order of their balances. 
D)  the descending order of their balances.

Question 4

Which of the following balance sheet classifications would normally require the greatest amount of supplementary disclosure?

Accepted Answer

A)  Current assets 
B)  Current liabilities 
C)  Plant assets 
D)  Long-term liabilities 
A)  Current assets 
B)  Current liabilities 
C)  Plant assets 
D)  Long-term liabilities

Question 5

A general description of the depreciation methods applicable to major classes of depreci-able assets

Accepted Answer

A)  is not a current practice in financial reporting. 
B)  is not essential to a fair presentation of financial position. 
C)  is needed in financial reporting when company policy differs from income tax policy. 
D)  should be included in corporate financial statements or notes thereto. 
A)  is not a current practice in financial reporting. 
B)  is not essential to a fair presentation of financial position. 
C)  is needed in financial reporting when company policy differs from income tax policy. 
D)  should be included in corporate financial statements or notes thereto.

Question 6

Keisler Corporation reports:   What is Keisler's ending cash balance?

Accepted Answer

A)  $310,000. 
B)  $380,000. 
C)  $530,000. 
D)  $600,000. 
A)  $310,000. 
B)  $380,000. 
C)  $530,000. 
D)  $600,000.

Question 7

The balance sheet omits many items that are of financial value to the business but cannot be recorded objectively.

Accepted Answer

A) True 
 B)False

Question 8

The primary purpose of a statement of cash flows is to report the cash effects of operations during a period.

Accepted Answer

A) True 
 B)False

Question 9

Harding Corporation reports the following information:   Harding should report cash provided by operating activities of

Accepted Answer

A)  $280,000. 
B)  $400,000. 
C)  $560,000. 
D)  $680,000. 
A)  $280,000. 
B)  $400,000. 
C)  $560,000. 
D)  $680,000.

Question 10

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Accepted Answer

A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities. 
A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities.

Question 11

Financial flexibility is a company's ability to respond and adapt to financial adversity and unexpected needs and opportunities.

Accepted Answer

A) True 
 B)False

Question 12

Use the following information to answer the next two questions.
Franco Company uses IFRS and owns property, plant and equipment with a historical cost of 5,000,000 euros. At December 31, 2013, the company reported a valuation reserve of
8,565,000 euros. At December 31, 2014, the property, plant and equipment was appraised at
5,525,000 euros.
-The property, plant and equipment will be reported on the December 31, 2014 statement of financial position at

Accepted Answer

A)  5,000,000 euros. 
B)  5,525,000 euros. 
C)  8,565,000 euros. 
D)  9,090,000 euros. 
A)  5,000,000 euros. 
B)  5,525,000 euros. 
C)  8,565,000 euros. 
D)  9,090,000 euros.

Question 13

Which of the following is not an acceptable major asset classification?

Accepted Answer

A)  Current assets 
B)  Long-term investments 
C)  Property, plant, and equipment 
D)  Deferred charges 
A)  Current assets 
B)  Long-term investments 
C)  Property, plant, and equipment 
D)  Deferred charges

Question 14

A generally accepted method of valuation is
1. trading securities at market value.
2. accounts receivable at net realizable value.
3. inventories at current cost.

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  1 and 2 
A)  1 
B)  2 
C)  3 
D)  1 and 2

Question 15

On January 4, 2014, Kiley Co. leased a building to Dodd Corp. for a ten-year term at an annual rental of $150,000. At inception of the lease, Kiley received $600,000 covering the first two years' rent of $300,000 and a security deposit of $300,000. This deposit will not be returned to Dodd upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $600,000 should be shown as a current and long-term liability in Kiley's December 31, 2014 balance sheet?

Accepted Answer

The answer of On January 4, 2014, Kiley Co. leased...

Question 16

Stine Corp.'s trial balance reflected the following account balances at December 31, 2014:   In Stine's December 31, 2014 balance sheet, the current assets total is

Accepted Answer

A)  $90,000. 
B)  $82,000. 
C)  $77,000. 
D)  $73,000. 
A)  $90,000. 
B)  $82,000. 
C)  $77,000. 
D)  $73,000.

Question 17

Land held for speculation is reported in the property, plant, and equipment section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

Balance sheet information is useful for all of the following except to

Accepted Answer

A)  compute rates of return 
B)  analyze cash inflows and outflows for the period 
C)  evaluate capital structure 
D)  assess future cash flows 
A)  compute rates of return 
B)  analyze cash inflows and outflows for the period 
C)  evaluate capital structure 
D)  assess future cash flows

Question 19

Liquidity refers to the ability of an enterprise to pay its debts as they mature.

Accepted Answer

A) True 
 B)False

Question 20

Because of the historical cost principle, fair values may not be disclosed in the balance sheet.

Accepted Answer

A) True 
 B)False

Exam 5: Balance Sheet and Statement of Cash Flows

Huge Cart Inc. gives you the following information pertaining to the year 2014. The rate of return on assets Huge Cart Inc. is:

Working capital is

Under IFRS, current assets are listed in:

Which of the following balance sheet classifications would normally require the greatest amount of supplementary disclosure?

A general description of the depreciation methods applicable to major classes of depreci-able assets

Keisler Corporation reports: What is Keisler's ending cash balance?

The balance sheet omits many items that are of financial value to the business but cannot be recorded objectively.

The primary purpose of a statement of cash flows is to report the cash effects of operations during a period.

Harding Corporation reports the following information: Harding should report cash provided by operating activities of

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Financial flexibility is a company's ability to respond and adapt to financial adversity and unexpected needs and opportunities.

Which of the following is not an acceptable major asset classification?

A generally accepted method of valuation is 1. trading securities at market value. 2. accounts receivable at net realizable value. 3. inventories at current cost.

Stine Corp.'s trial balance reflected the following account balances at December 31, 2014: In Stine's December 31, 2014 balance sheet, the current assets total is

Land held for speculation is reported in the property, plant, and equipment section of the balance sheet.

Balance sheet information is useful for all of the following except to

Liquidity refers to the ability of an enterprise to pay its debts as they mature.

Because of the historical cost principle, fair values may not be disclosed in the balance sheet.

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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